Trouble adding new pics with the OOB editor

[Rosollia]

Yes the palette is important.

Attached is a WinSP icon palette converted to a format that Ultimate Paint understands (HTML color codes). The palette files in the games desing folder only work with PSP.

So you load the palette file and then click the box "Limit Colors"
and select "Use Colors in Fast Palette".

Then you save the picture making sure you select 256 colors and check the box "Use Fast Palette".

See the screenshots for more help.